Financial Spring Cleaning
It is spring again and the days are getting longer and warmer. It is that time of year that we open our windows to let fresh air into our homes. Many of us start tackling projects that we have put off all winter. To piggyback on this natural momentum, this month we will be focusing on “Financial Spring Cleaning.”
So much of your financial stability is built upon your credit score. You shouldn’t wait until you need a loan to think about your credit. In reality, you should constantly be working on it. Here are some tips to building better credit from the Consumer Financial Protection Bureau:
Pay your bills on time, every time. An automatic payment from your bank can be a good way to do that, but make sure you keep an eye on your balance so you always have enough in your account to cover the payment.
Don’t get too close to your credit limit. Credit scoring models look at how close you are to being “maxed out” on credit cards. If you use too much of your total credit lines, say by carrying big balances, you can hurt your credit score. Experts advise keeping your use of credit at no more than 30% of your total credit limit – some even say you should keep it at less than 10%.
Don’t apply for too much credit in a short time. Your credit score may go down if you apply for or open a lot of new accounts in a short time. Buying something and want the discount that comes with opening a new store card? Transferring balances from an old card to a new one? Do that very often and it will show up on your credit report as lots of new credit accounts, which is likely to hurt your credit score.
The more extensive your credit history, the better. Credit scores are partly based on experience over time. The more evidence you have on how you get and pay for credit, the more information there is to determine whether you are a good credit risk.
Check back throughout the month of May on tips to spruce up your finances. Whether you need to plug leaks in your spending or reorganize your paycheck for retirement, we will have resources to help you make needed changes this spring.
Check out the following links for more great online resources for consumers.
Smart about Money: NEFE is an independent, nonprofit foundation committed to educating Americans on a broad range of financial topics and empowering them to make positive and sound decisions to reach their financial goals
Practical Money Skills: At practical money skills, consumers, educators, parents, students and policymakers can access free educational resources, including personal finance articles, games and lesson plans
360 Degrees of Financial Literacy: A free program of the nation’s certified public accountants to help Americans understand their personal finances through every stage of life
Retirement Paycheck: A website from the National Endowment for Financial Education (NEFE) dedicated to improving the wellbeing of Americans in retirement
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This Consumer Tip and MontanaLawHelp.org is a joint project of Montana's Credit Unions and Montana Legal Services Association. MontanaLawHelp.org has information about consumer issues, housing, money management, and more.